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MARKET CLOSE: NZX 50 lifts to 6-week high; PPP swings back to gain; ALF falls

Friday 5th March 2010

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New Zealand’s NZX 50 Index edged up to a six-week high, in relatively light trading, amid optimism companies have room to lift earnings this year, stoking equity valuations. Pan Pacific Petroleum led gains, having flip-flopped all week.

The NZX 50 rose 1.08, or 0.03%, to 3214.643, the eighth straight gain. Within the index, 20 stocks rose, 18 fell and 12 were unchanged. Turnover was a lower-than-average $56.5 million.

Pan Pacific (NZX: PPP ), which last month posted a first-half loss, reflecting exploration costs and the fading contribution from Tui oil, jumped 13% to 35 cents, leading the index higher. Yesterday it fell 6.1%, leading the index lower.

Restaurant Brands (NZX: RBD ), which has the KFC, Pizza Hut and Starbucks franchises, fell 2.5% to $1.93, reversing some of its gains if yesterday, when it said profit beat its forecast.

Some investors say there’s room to build on equity gains this year after a 12-month stretch that has seen the S&P 500 Index climb 64% in the US. Locally, the NZX 50 has gained 30% in the past 12 months.

“There are still lots of people out there wanting to buy on dips,” said Keith Poore, head of investment strategy at AXA Global Investors in Wellington. “Valuations are quite full on current earnings, but they are at cyclical lows. The latest earnings season shows a bit of bounce-back.”

Telecom (NZX: TEL ), whose XT network outages have undermined earnings and hurt its brand, fell 0.4% to $2.25 today, as major daily newspapers the NZ Herald and the Dominion Post ran interviews and book excerpts from former Telecom chief Theresa Gattung, questioning current CEO Paul Reynolds’ pay in the wake of the XT debacle.

PGG Wrightson (NZX: PGW ) fell 3.3% to 59 cents, the biggest decline on the NZX 50. The benchmark index is suffering the rain-shadow effect of completing its earnings season with a marked drop-off in corporate activity. NZX (NZX: NZX ) fell about 3% to $1.96.

Sky Network Television (NZX: SKT ) which today announced a new channel that will run Television New Zealand’s archival programming, fell 0.8% to $5.08.

Ebos Group (NZX: EBO ) fell 0.8% to $6.25. Courier and logistics firm Freightways (NZX: FRE ) rose 2% to $3.09 and Mainfreight (NZXMFT) gained 1.7% to $6.

Allied Farmers (NZX: ALF ) fell 3.8% to 7 cents after announcing it has placed Property Ventures into the hands of receiver Grant Thornton in an attempt to recover a loan to Five Mile Holdings Limited (In Receivership) of more than $41.5 million.

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